Vodafone Idea shares in 15% lower circuit; Cabinet freezes ₹87,695 crore AGR dues for five years

Shares of Vodafone Idea Ltd. fell as much as 16% on Wednesday, December 31, after the Union Cabinet has likely approved an adjusted gross revenue (AGR) relief package for the debt-laden telecom operator. At the lowest point of the day, the stock fell below its Follow-On Public Offer Price of ₹11.

As part of the relief measures, the Cabinet is said to have approved a five year moratorium on AGR payments.

Vodafone Idea's AGR dues amounting to ₹87,695 crore have been frozen, offering major relief to the company's stretched balance sheet.

According to available details, the payment of the ₹87,695 crore AGR dues will be rescheduled over FY32 to FY41. The frozen dues will be reassessed by the Department of Telecommunications based on audit reports, while AGR dues related to FY18 and FY19 will be payable by Vodafone Idea over the next five years.

The telco has been grappling with a heavy dues burden, with AGR liabilities of about ₹83,400 crore.

The debt-laden company has repeatedly cautioned that its survival hinges on timely funding support, as banks remain reluctant to lend given its stressed balance sheet. Vodafone Idea employs more than 18,000 people and serves close to 198 million subscribers across the country.

A few weeks ago, the Supreme Court allowed the government to undertake a comprehensive reassessment and reconciliation of all dues of the financially stressed telecom company, including interest and penalties, up to FY17. The move was widely seen as a huge relief for Vodafone Idea.

In September, the company had sought a waiver of penalty and interest on an AGR demand of ₹9,450 crore raised by the DoT, arguing that a large portion of the amount related to the pre FY17 period that had already been settled by the apex court in 2020.

Of this demand, ₹2,774 crore pertains to post merger liabilities of Vodafone Idea, while ₹5,675 crore relates to pre merger dues of the Vodafone Group.

The government became the largest shareholder in Vodafone Idea in March this year after converting dues worth ₹36,950 crore into equity, taking its stake to nearly 49%. Earlier, in 2023, the Centre had acquired a 33% stake in the company in lieu of statutory dues exceeding ₹16,000 crore.